Performance of FTSE 100 and FTSE All Share over 1-mth
Source: Financial Express Analytics
A poll on the site earlier this week asked investors: "Will the FTSE remain anchored between 5,000 and 5,600 points through 2010? Of 747 respondents, 62 per cent said yes, indicating a positive mood amongst IFAs and investors.
| Will the FTSE remain anchored between 5,000-5,600 points through 2010? | |
| Yes | 62.25% |
| No | 29.59% |
| Unsure |
8.17% |
Source: Trustnet. Poll conducted 21 June - 27 June 2010. Respondents 747
But a string of poor data from the US and China last week sent markets tumbling, and investors seeking out ways to safeguard their money. Managers are moving their holdings into gold, increasing their cash weightings, and cutting risk in their funds.
Joshua Raymond City Index said investors have become very cautious recently, with short bets becoming far more popular – a completely different climate to this time last year. He explained why market sentiment turned so quickly: "At the start of the year we saw a fantastic rally, which continued until mid-April. But the European sovereign debt crisis meant the mood turned around, and investors are starting to realise the impact it may have on them. The season also has an impact; trading volumes are lower in the summer, which means indices can spike more."
But other IFAs say investors have learnt from the downturn, and are invested for the long-term.
"Sentiment has deteriorated quickly over the past fortnight .There is a lot of talk of double dip, and the market is reflecting that. However, clients are often more sanguine than we expect them to be in this environment – they have all seen markets fall before, without too much damage to their portfolio," Jonathan Wallis, director of fund research at IFA Allenbridge said.
All eyes are now on US Manufacturing and Pending Home Sales data, out later today, as to whether the trend of negative data will continue. Further gloom is expected in Friday's non farm payrolls, which are tipped to show their first fall in jobs so far this year.
"Confidence has gone, especially from Europe, because of this macro data. But long-term investors will be expecting fluctuations anyway, as such peaks and troughs aren’t unusual anymore. Following the 2008 crash investors now are more prepared for volatility," Dennis Hall, IFA at Yellowtail Financial Planning said.
Of the remaining 38 per cent of Trustnet readers polled, 30 per cent said they did not expect the market to stay between 5,000 and 5,600, while eight per cent said they were unsure.